NZ Dairy Foods demands stronger competition measures

Additional measures are needed to protect competition in the domestic New Zealand milk sector, NZ Dairy Foods said on Monday. NZ Dairy Foods is to be split from 50 per cent owner NZ Dairy Group as part of a shake-up in the New Zealand dairy sector that will see NZ Dairy Group, rival Kiwi Co-operative Dairies and export unit the NZ Dairy Board merger into one firm, dubbed GlobalCo. NZ Dairy Foods will be left outside the new grouping as an independent player to preserve competition in the domestic sector but the companys said in a statement that it was not as simple as this. NZ Dairy Foods, at least initially, will still be dependent on GlobalCo for its milk supply, while competing with GlobalCo's domestic unit in the NZ market. "We will be left with one vertically-integrated giant on the domestic side, with everything from raw milk to retail products, while any others will be dependent on it for their basic supply,"​ NZ Dairy Foods chief executive Peter McClure said. McClure said his company would push for some changes to legislation enacting the GlobalCo merger at a parliamentary committee on Tuesday. NZ Dairy Foods on Saturday reported a slump in profits to NZ$900,000 for the year to May 31, from NZ$11.8 million in the previous year. It blamed this on a low New Zealand dollar and high dairy commodity prices - which had led to a sharp hike in raw milk costs for the company, which processes 700,000 litres of milk a day. NZ Dairy Group must sell its half share in NZ Dairy Foods for the merger to go ahead and NZ Dairy Foods has said previously it expects this to attract international interest. However the owners of the other half of the domestic dairy company - around 7,500 dairy farmers - are reported to be mulling their own bid to move to full ownership. GlobalCo, when formed, says it will be the world's ninth largest dairy company with projected 2001/02 annual revenues of more than NZ$12 billion from assets around NZ$10 billion.